"Stabilizer" or "catalyst"? How green technology innovation affects the risk of stock price crashes: an analysis based on the quantity and quality of patents

TL;DR

This study examines how the quality of green technological innovation influences stock price crash risk, revealing that higher quality innovation reduces crash risk in nonstate-owned firms but not in state-owned firms, with media negativity mediating this relationship.

Contribution

It introduces a nuanced analysis of how green innovation quality impacts stock crash risk, considering ownership type and media effects, based on extensive Chinese firm data from 2008 to 2018.

Findings

Green innovation quantity is unrelated to crash risk.

Higher quality green innovation reduces crash risk in nonstate firms.

Media negativity mediates the relationship between green innovation quality and crash risk.

Abstract

To explore the relationship between corporate green technological innovation and the risk of stock price crashes, we first analyzed the data of listed companies in China from 2008 to 2018 and constructed indicators for the quantity and quality of corporate green technology innovation. The study found that the quantity of green technology innovation is not related to the risk of stock price crashes, while the quality of green technology innovation is negatively related to the risk of stock price crashes. Second, we studied the impact of corporate ownership on the relationship between the quality of green technological innovation and the risk of stock price crashes and found that in nonstate-owned enterprises, the quality of green technological innovation is negatively correlated with the risk of a stock price collapse, while in state-owned enterprises, the quality of green technological innovation and the risk of a stock price collapse are positive and not significant. Furthermore, we studied the mediating effect of the number of negative news reports in the media of listed companies on the relationship between the quality of corporate green technology innovation and the stock price crash and found that the quality of green technology innovation is positively correlated with the number of negative news reports in the media of listed companies, while the number of negative news reports in the media of listed companies is positively correlated with the risk of a stock price collapse. Finally, we conducted a DID regression by using the impact of exogenous policy shocks on the quality of green technology innovation, and the main results passed the robustness test.